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We have a thread to watch the Saudi's squirm, might as well track American utilities as they try to divest from fossil fuel based production before the whole profit scheme crumbles.

Once German solar hit about 4-5% of total electricity production the three major utilities lost up to 70% of their market cap and tried to divest from any and all fossil or nuclear production. With solar having grid priority and feed in tariffs set by law, their was no profit to be found in fossil production. The peak afternoon hours that were once the source of most utility profits actually turned NEGATIVE on the wholesale(supply) side.

Now that solar is getting a foothold and wind gets stronger every day, we should see American utilities trying to quietly jump ship as well.

American Electric Power Co. Inc., which hired Goldman Sachs Group Inc. last year to advise on the possible sale of assets in the U.S. Midwest, opened up confidential data to potential buyers, a step that may indicate the company’s closer to a decision on the package of plants.

The Columbus, Ohio-based company has “done a lot of things with confidential data rooms” and believes there are buyers interested in the plants, capable of producing about 5,000 megawatts, Chief Executive Officer Nick Akins said in an interview at Bloomberg’s headquarters in New York. Opening up so-called data rooms allows potential purchasers to review private financial information while agreeing not to disclose it.

Akins declined to comment on rival Dynegy Inc.’s claim that it wasn’t invited to make an offer on the plants in Ohio and Indiana. He said the company will take bids from those “we think are suitable.”

American Electric is among U.S. utilities looking to get rid of plants that compete in wholesale power markets in favor of running assets offering stable, regulated returns. Cheap natural gas flowing out of the nation’s shale formations has dragged down wholesale electricity prices, squeezing the profits of so-called merchant power generators. Akins said his company is looking to sell its unregulated plants as a package in its effort to “move to a regulated utility.”​

This is an important theme. It's curious that the distinction is between regulated and unregulated assets. Rather than between assets of high economic value going forward and low economic value. Regulation seems to be the arbiter of what is profitable and what is not. And this is the fundamental mistake that utilities have been making all along. They exist simply to enjoy regulated profits rather than to deliver power at lowest cost thereby creating the most economic value.

Longer-term all thermal electric plants are unprofitable apart from regulated profits. So smart utilities should divest all of them while they still have some regulatory value which might attract a buyer. If they wait and the regulatory environment continues to shift, then by the time these assets move into the unregulated category, they will have lost that value. So they should seek a buyer while a buyer may be found. The regulatory must change, and the utilities must put themselves in a position to benefit from the changes that must happen. Holding onto assets whose value depends on status quo policy makes it very hard for a player to do anything but cling to status quo policy. Let go of those assets and suddenly new policy options present genuine growth opportunities.

A deal between the nation’s largest solar company and Arizona’s biggest utility means competing measures asking voters about how to treat rooftop solar power are being withdrawn.

The agreement announced late Thursday between SolarCity and Arizona Public Service puts an end to an increasingly public fight pitting the utility against solar companies for now.

The two sides agreed to mediation over how solar customers are paid for the power they produce on their rooftops. Gov. Doug Ducey and lawmakers negotiated with the two sides and the governor’s office will participate in the talks.​

Once German solar hit about 4-5% of total electricity production the three major utilities lost up to 70% of their market cap and tried to divest from any and all fossil or nuclear production. With solar having grid priority and feed in tariffs set by law, their was no profit to be found in fossil production. The peak afternoon hours that were once the source of most utility profits actually turned NEGATIVE on the wholesale(supply) side.

Now that solar is getting a foothold and wind gets stronger every day, we should see American utilities trying to quietly jump ship as well.

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We're barely seeing the first hints of consumers making headway in the US against utilities as they battle to maintain their revenues in the face of far cheaper renewables.

Meanwhile, Germany remains 5 steps ahead of us as this week their massive utility RWE is discussing selling their $20B renewables arm Innogy. Merkel made it so RWE and the other large utility EON had to break off renewables and grid services from fossil/nuke production then wouldn't let them just walk away from production as wholesale prices tanked on strong wind/solar supply.

That's the kind of foresight we could use at the federal level, but will never see. Imagine how this scenario might have played out in Nevada or Arizona if these entities were dropped into the US market. Amazing that Germany could get this all done in light of their crap solar potential.

At least we can now point to a renewables and grid services company being actively courted flashing . It'll be interesting to see how these two massive nonrenewable spin-off end up being valued. Being able to own 25% of an energy marketplace growing more complex each day has got to be wildly valuable 5-10 years from now.

RWE and its main competitor EON SE, once among the biggest companies in Germany, have been transformed by Chancellor Angela Merkel’s shift toward an economy underpinned by renewable energy instead of nuclear and fossil fuels. Wholesale power prices have dropped by more than 40 percent since 2011, resulting in combined writedowns of almost 30 billion euros.

In an attempt to turn the tide, both companies split themselves in two: as well as Innogy’s separation from RWE, EON spun off its legacy fossil-fuel business into Uniper SE. The shake-up stirred talk of consolidation in the sector. EON has also considered a tie up with Innogy, people familiar with the matter said in January.

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Goldman Sachs Group Inc., which advised RWE on the Innogy spinoff, said in a report in January that it expected “large, game-changing” mergers and acquisitions in the sector because of low borrowing costs and stronger balance sheets.

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How long until we have a semi-unified open energy market in Europe and storage takes off like crazy? Germany(and others ahead of the wind/solar curve) have major incentive to sell across as many borders as possible.

There is a basic need for batteries to play as market makers in power markets. The power markets are broken because there are really no swing buyers and too many producers which are price takers. Batteries are the natural market swing traders that can help stabilize prices throighout the day.

There is a basic need for batteries to play as market makers in power markets. The power markets are broken because there are really no swing buyers and too many producers which are price takers. Batteries are the natural market swing traders that can help stabilize prices throighout the day.

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there's only one problem, the batteries you reference are not capable or in mass production/usage at this time

when is now, on a very small scale. storing electricity on a large enough scale to make it viable for mass usage has always been the bugaboo. maybe more knowledgeable electrical engineers could fill in the blanks

there's only one problem, the batteries you reference are not capable or in mass production/usage at this time

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For me an interesting question is how much battery capacity is needed. In South Australia average consumption is 1.8GW, average wholesale supply is 1.5GW (apparently lots of self-supply, think rooftop solar), and recent peak wholesale supply 3.0GW. 100MW of batteries may be enough to prevent some brown out events, but I suspect that something on order of 0.5GW / 2.0GWh would start to fundamentally change the wholesale intra-daily market. With batteries reaching 2GW / 8GWh, I suspect that all the daily balancing would be based on batteries rather that use of peaker and load-following generation.

So I speculate that SA can get to 0.1GW in about 100 days, 0.5GW in 2-3 years, and 2.0GW in 6 to 10 years. I believe Tesla alone could supply this, but there are many more competitors that will ramp up supply as well.

Also for comparison, SA State wants to build and own a 250MW gas peaker, but I think that go unused after about 0.5GW of batteries are in play, and be wholly irrelevant by the time there is 2GW in storage. It think the state would do much better incentivizing home owners and businesses to get 250MW of their own batteries for backup use than to build a 250MW gas peaker. It would be more effective/robust, cost only a fraction, and would retain economic value much longer.

Also for comparison, SA State wants to build and own a 250MW gas peaker, but I think that go unused after about 0.5GW of batteries are in play, and be wholly irrelevant by the time there is 2GW in storage. It think the state would do much better incentivizing home owners and businesses to get 250MW of their own batteries for backup use than to build a 250MW gas peaker. It would be more effective/robust, cost only a fraction, and would retain economic value much longer.

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Thanks for the analysis -- I have been wondering about this question of how much battery storage is required. One example is the island of Ta'u where Tesla battery storage is about equal to generating capacity * 4. A grid that also integrates other power plants (like wind, hint hint) and some NG peakers would have markedly reduced capacity requirements.

Seventeen conservative Republican members of Congress—10 of them in their first or second terms—are bucking long-time party positions and the new occupant of the White House. They announced on Wednesday that they’re supporting a clear statement about the risks associated with climate change, as well as principles for how best to fight it.

Called the “Republican Climate Resolution” by supporters, the statement by House members takes about 450 words to mention conservative thought on environmentalism, support for climate science, feared impacts, and a call for economically viable policy. They pledge in general terms to support study and mitigation measures, “using our tradition of American ingenuity, innovation, and exceptionalism.”

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